The idle musings of a former military man, former computer geek, medically retired pastor and now full-time writer. Contents guaranteed to offend the politically correct and anal-retentive from time to time. My approach to life is that it should be taken with a large helping of laughter, and sufficient firepower to keep it tamed!

Tuesday, March 17, 2020

The "perfect storm" may be brewing in Europe

Europe is facing perhaps the most critical set of challenges in its modern history - and in combination, they threaten to destroy the European Union and its common currency, the Euro. The coronavirus pandemic is merely the "cherry on top" of a set of other issues that are all coming to a head simultaneously. What's more, developments there are of direct and immediate concern to the United States, because they'll have a "spillover" or "knock-on" effect that will undoubtedly affect us.

First, there's the almost irresistible rise of nationalist sentiments - "our nation" rather than "our overarching European community". Britain exemplifies this with its long-drawn-out struggle between a pro-European "elite" or "deep state" and popular resentment over loss of control over the nation's own destiny, forcing it into a European mold that was never a good fit. The result was Brexit, which took effect at the end of last year, and is now being tidied up and implemented. Britain's far from the only nation or national bloc that wants to be independent. Italy has a strong nationalist movement; parts of Spain and other nations want to break away from both the EU and their national government; and Eastern Europe nations in general are suspicious of the supra-national bureaucracy in Brussels telling them what to do and how to govern themselves.

Next, there's the problem of Third World migration. This isn't going to go away anytime soon: in fact, it's going to get worse and worse. Uncontrolled population growth in Africa, combined with massive political incompetence, corruption and inefficiency in that continent, has resulted in literally tens of millions of people who are desperate to go somewhere - anywhere! - that offers them a better life. They aren't worried about whether or not they're welcome, or whether or not their presence will be legal. For them, it's literally find a way to make a living and support those they've left behind, or starve. Therefore, they're flooding into Europe, and won't stop coming, because that continent is so much richer than their own that it's like a great big light beckoning them onward in the darkness. Couple this with an influx of alleged "refugees" (in reality, mostly economic migrants) from Middle Eastern countries, and Europe is awash with foreigners who depend on its social support structures and entitlement programs, won't assimilate into the culture and language of their new home, and want to bring all their families and friends to join them. In the process, they're igniting xenophobia and nationalism all over again - the very factors the European Union was supposed to minimize and mitigate.

Add to that adventurist politics in Turkey, where President Erdogan seeks to portray himself as the new Caliph of the Islamic world. He's more or less openly supported extremist terrorism in Syria, and when that failed, he intervened militarily to support his client organizations there. He's also trying to intervene in Libya, where his puppets have "granted" Turkey exploitation rights to the seabed of the Mediterranean Sea between their countries (without having the legal right to do so, and in defiance of other national economic zones and interests in the same area). This has produced millions more refugees to threaten Europe's stability, and he's using them to do precisely that, as a retaliation for Europe's refusing to support his adventurism. It's also resulted in Turkey's increasing isolation within NATO. Turkey is now distrusted almost as much as Iran by the rest of Europe and the USA.

That, in turn, has led to a major shift in European attitudes towards migration and refugees, which has become visible during the latest refugee crisis in Greece when Erdogan withdrew border controls and urged over three million refugees to cross into the latter country on their way to Europe. Greece hardened its attitudes and its border, and is fighting to keep them out. Other Eastern European nations are sending detachments of their armed forces to help Greece. The Economist observes:

In 2015 thousands of irregular migrants and asylum-seekers entered Hungary, en route to Germany. Hungary’s prime minister, Viktor Orban, built a fence along the country’s southern border to stop them. The European Commission chided Mr Orban. “We have only just torn down walls in Europe; we should not be putting them up,” tutted a flack for the European Commission. Fast forward five years, and ugly scenes erupted at the EU’s borders once again. Migrants trying to reach Europe on a dinghy were greeted by a Greek vessel, whose crew hit the boat with sticks and fired warning shots at them. This time the commission had a different response. “I thank Greece for being our European aspida [shield] in these times,” said Ursula von der Leyen, the president of the European Commission. What changed?

Two visions of the EU competed during the migration crisis of 2015 and 2016, when more than 2m people flooded into the bloc. On one side stood the humanitarians, who viewed the EU as a normative power, a shining light on a hill. For them, the response was a moral question with a simple answer: Willkommenskultur. On the other side were the hardliners. Their argument for stiff, brutal measures at the border was based on practicality (a state can only feed and house so many refugees at once) and politics (voters will kick out anyone who allows too large and sudden an influx, sharpish). After five years of wrestling, the humanitarians have been routed. Now the hardliners reign supreme.

There's also the undeniable fact that most of the "refugees" streaming towards Europe are not, in fact, refugees at all - they're economic migrants. They want a better life for themselves, and if the only way to get it is to pretend to be oppressed victims of war, they're more than willing to do that. They're being actively assisted by those who regard immigration and border restrictions as fundamentally wrong, and seek to overturn them. Hungary has been in the forefront of those pointing out this reality.

[Hungarian Prime Minister Viktor] Orban said depictions of the situation at the Hungarian border in the international media were inaccurate, arguing that 95 percent of newly arrived migrants were military-aged men.

It’s forbidden to say so in Europe, but this is an organized invasion, Orban said.

So far this year, more than 5,000 migrants have attempted to enter Hungary illegally, with many of them showing up in large organized caravans.

The Hungarian Prime Minister insisted that the migrants were backed by organizations claiming to be NGOs operating similarly to people smuggling groups. These organizations had significant financial resources and considerable logistical capabilities, he added.

He also said Hungary’s secret service was monitoring the situation and had a clear view of “how the movement of migrants is being organized”.

Now, on top of all these pressures, we have the arrival of the coronavirus pandemic. It's closing down economies all across Europe, and imposing unbearable financial difficulties on companies and nations already in a parlous fiscal state. There are calls there, as in the USA, for billions, even trillions, in government aid to the business sector. There is no money left to fund the absorption of new waves of refugees, even if there was space for them; and there are no jobs for them to support themselves. Even existing refugees are likely to find themselves holding the short end of the stick compared to citizens and voters. The cost of caring for thousands, possibly hundreds of thousands, of sick people is going to cripple European budgets for months to come, perhaps years; and the economic fallout of the pandemic will persist for years, perhaps decades.

The image of the "finger in the dike" is well known: a boy sticks his finger in a hole to stop the water coming through, thereby saving the low-lying land behind the dike. For decades, Europe has basically held itself together by using this approach. Every time a leak appeared in the wall surrounding its cherished unity and joint principles, an official finger was rammed into the hole to keep out the barbarians who threatened to destabilize it. Now, there are too many pressures, and too many holes, and not enough fingers. The European Union can't possibly plug them all. Neither can the individual nations within it. The dike - i.e. the Union itself - is in grave, possibly irreversible danger of collapse.

The pressures being exerted on the European Union right now are enormous. I doubt very much whether it can withstand their cumulative onslaught. Tom Luongo agrees.

Regardless of whether you believe the pandemic is real or not, the reaction to it is real and is having real consequence far beyond the latest print of the Dow Jones Industrial Average.

The lockdown of Italy isn’t a temporary thing. Oh, the suspension of free movement is temporary, but it portends something far bigger.

It’s the beginning of the real political balkanization that’s coming to the European Union over the next few years. Old enmities and prejudices have not been stamped out under the boot heel of oppressive legislation coming from a bunch of disconnected technocrats in Brussels.

They have only been suppressed.

Because when there are existential threats there’s no time or desire to virtue signal about how we’re all one big happy dysfunctional family.

. . .

So in the midst of this mess comes COVID-19 and the uncoordinated and inept response to it from the political center of Europe to date. Only now are they coming to the conclusion they need to restrict travel, after sitting on their hands for a few weeks while Italians died by the hundreds.

. . .

And this is your signal that this is the beginning of the real crisis. Because while COVID-19 may have been the catalyst for the breakdown of capital markets, capital markets were simply waiting for that spark to occur.

Any other type of spark, a bank failure from a run of bad loans, could have been handled and absorbed ... But with COVID-19 being the ultimate form of exogenous shock to the global economy there is no containing the financial contagion.

. . .

The next stage of the crisis is here with the focus finally turning to Europe. The U.S., for all of its faults, is one nation with a unified debt market and an executive who can and has exercise powers necessary to keep the wheels from completely falling off the U.S. economy ... That money will go into a logistical pipeline that far outstrips Europe’s to combat a disease over a smaller population spread across larger distances. That limits the damage to the U.S. It ensures political stability that the EU cannot hope to compete with for the trust of spooked capital.

Add the global economy grinding to a halt. We’ll see the crisis emerge in Europe to feed a widening gyre of debt servicing that will look like a global bank run on dollar liquidity.

It will force fundamental reform of the euro and the ECB. They are necessary for the EU to survive this crisis in anything close to its current form.

I’m not laying odds that will work. Instead I expect Schengen’s suspension to hold and more countries go the way of the Brits by exiting the EU itself.

The European Union is one of four major power blocs in the world, the others being the USA and its allies, China and its allies, and (diminished, but nevertheless still wielding influence and power) Russia and its allies. If the EU collapses under the strain of all these simultaneous pressures, global geopolitics will be substantially realigned. It'll be a time of great stress for all the other power blocs, and nobody can be certain what the new balance will be that eventually emerges.

As for the refugees flooding into Europe (not to mention those already there, who are refusing to assimilate and overloading social services), I suspect they're going to be in for a very hard time indeed. As my friend Tamara Keel observed back in 2013:

Euros have a proven zero-to-jackboots time lower than just about anybody on the planet. Get Gunter or Pierre all backed into a corner and feeling existentially threatened and you'll be wishing you hadn't, faster than you can say "Arbeit Macht Frei".

I think she was exactly right; and I think we're going to see that sentiment in action in Europe soon. We're already seeing it on the Greek border with Turkey.

"Couple this with an influx of alleged "refugees" (in reality, mostly economic migrants) from Middle Eastern countries, and Europe is awash with foreigners who depend on its social support structures and entitlement programs, won't assimilate into the culture and language of their new home, and want to bring all their families and friends to join them."

Brexit proved to the rest of Europe that leaving the EU was possible. Eastern Europe has good reasons to be wary of belonging to a consortium dominated by a unified Germany, especially with the EU clamoring for their own military. Not sure how it will play out in the future, but my opinion is that the EU is beginning to fall apart. It may survive a a regional trade organization but as a European Superstate, their days are numbered.